Still wouldn’t be able to afford a mortgage though.
Good, they need a long, slow drop to get to an actual natural level not inflated by government schemes.
To think back in the 90’s -2003 you could buy a house for 45-70k in Birmingham UK.
Now the same place it’s 135k if your lucky and the house will probably need work doing to it..
Most have been priced out the market decades ago and government schemes have just made ppl take on huge mortgages which will now hurt more
10% of £200,000 is 20,000… Show me a renter able to drop a lump sum of 180,000. This just means more businesses will buy houses to rent out.
A 10% drop sounds terrible for those on a mortgage (shadows of negative equity) but I’d you are buying a *home* and plan to stay there a number of years, a short term dip shouldn’t be of too much concern.
Any loss also needs to be chalked up against any extra costs one would have had from renting (which could include having had to move).
Our place has gone up by ~40% in barely 4 years. That is simply madness. Utterly batshit insane. So a 10% drop would mean it has *only* increases in value by 25%. Still mad if you ask me.
Of course, I am viewing this through the lens of it being a home to live in and not a rental to profit from, or an investment to hoard.
This honestly doesn’t sound like a good thing. In the short term, sure, but in the long run, it just seems like we’re heading into a massive recession.
I mean, we are anyway, but house prices collapsing never bodes well for future prospects. Just look at 2008.
Many are still priced out of buying a house regardless. Build more houses, heavily tax second/holiday home ownership and limit the amount of BTL properties an individual/company can own.
A third of all of our nation’s wealth can be seen in the growth in house prices over the last 20 years. That is absolutely absurd. Deliberate government policy has been to push as much wealth into house prices as possible; other countries mock us for basing our economy on it.
We need change. First Time Buyers are finding it increasingly impossible to get on the ladder, renters are getting put in even worse positions with rent spiralling upwards, and the interest rates are likely to stay high. But any significant drop in house prices means negative equity and recent FTBs losing their homes.
A sensible, thoughtful government would use all of the tools at its fingertips to attempt to keep house prices approximately flat for 5 years. This would see them get more affordable relative to wages but not push anyone into negative equity, and allow the wealth being unreasonably slammed into housing be spread around the economy.
Some things that the government can do:
Stamp duty
Build more homes (subsidising schemes or doing it themselves)
Reducing restrictions on building on brown / greenbelt
Raise taxes significantly on second & empty homes
Make primary home sales eligible for CGT if the difference between purchase and sale price exceeds the CGT threshold of £85k
Manage interest rates
The government won’t do this though, because the Conservative party’s voters are almost exclusively 50+ homeowners.
Base on roughly real experience for my younger brother.
The average house price today at my parents city is currently 320K.
10% drop would still leave it at 288K average.
5 years ago, the average was 220K average.
Still a 30-31% increase over 5 years.
Not counting compounded interest, he tried to save for a 10% deposit on a 220K at time 0 meant…
Within year 0-1, you’ll need 22.0K (*1800/month*)
Year 1-2, you’ll now need 23.3K (*970/month*)
Year 2-3, you’ll now need 24.6K (*680/month*)
Year 3-4, you’ll now need 26.0K (*540/month*)
Year 4-5, you’ll now need 27.3K (*450/month*)
Year 5…, you’ll now need 28.8K
Forever chasing that deposit for the same house, and that wasn’t including him renting/house share, and the other associated cost for buying (surveyors and lawyers etc).
This is how fucked up the growth has been.
Edit: The ( *amount* ) is what he needed to save monthly since year 0 onwards…
Edit 2: The amount of people who don’t understand Averages and its increase. It’s an example of available data for visualisation of the chase. One can obviously buy a cheaper property, but the increase in % is the same. (Not many FTB can save 1800 monthly, or even 450 monthly in 5 year hind sight, now try all that number at 50% cheaper price point, same issue)
over inflated house prices.
With inflation and interest rates, buy to let landlords are going to be totally screwed😂
I don’t see this now, the market in our area stumbled in Nov/Dec, but again is still climbing, shit houses are being priced as high as they were and the few nice ones are inflating further because of demand.
Supply has dropped very low and demand has not.
They can predict all they like. Increased burrowing costs materials and labour added to price drop will soon stop builders building,
Indeed the stories the other day said building firms are going bust at record rates.
Demand will still out weight supply. Might dip for a few years then it’s back up and running
“declines of 30% aren’t out of the question. Halifax sees an 8% drop. Others are more cautious, seeing smaller declines. Beacon Economic Consulting anticipates a 0.3% drop next year”
So 30% or next to nothing
For anyone who thinks this is a good thing, such a fall only takes things back to price it was in 2020, and it’s entirely because people’s ability to afford a purchase is falling. This is the situation getting worse, not better.
Just in time for all the rich people to buy them up rent them out at extortionate prices to add to their assets, they must be Cumming in their pants at thought of people defaulting on their mortgages so they can add even more to their wealth.
Why does everyone think a pricing crash will solve ftbs problems. Unless they have the cash to capitalise when it does crash it won’t help. The only ones with that cash will likely have bought anyway.
The banks will pull the high ltv products and if you can get a mortgage the interest will be higher so you glut not be able to afford the loan anyway.
As much as houses need to become more affordable it’d be so much better for everyone if this happened through inflation of everything else including wages while houses didn’t move and mortgage interest rates got massively regulated. There’s no way that’s going to happen but it’s the one way I think this could be done that doesn’t destroy the finance sector and/or leave tons of innocent people in negative equity.
Instead what will happen is the government and finance will fight tooth and nail for every penny and everyone will suffer for it.
Holy shit! Let’s cut even more public services so that we can cut interest rates to avoid this catastrophe!!
FTB on here celebrated interest rates rising and the supposed collapse of the housing market.
All that happened was families tightened their belts to pay their mortgages and stopped moving house reducing supply. Mortgages became more unaffordable making the FTB even further away from buying a decent house. And forced landlords to increase their rents which they are now complaining about.
Property prices haven’t went down for desirable houses. There is a lack of them but they still sell very quickly.
The houses that are left on the market are the crackden doerupers. Last summer yes they would still quickly sell. But not anymore. No one wants the mortgage and to have to do relocations. People want a property they can just move straight into now.
Right I’ve not a clue about buying housing. I’m saving for a deposit but we’re talking a good few years yet. Can anyone explain why negative equity is a bad thing ? Surly you just hold the asset until it gets to a price you want to sell it at or you just stay put ?
Like I said I don’t much about buying housing.
That’s still way higher than prices used to be ten years ago.
Recent FTB. Time will tell whether I was lucky or utterly screwed myself. Feel so bad for colleagues of mine on same pay priced out (or dodged bullets?) on same range as me after mere months due to interest rates going through the roof.
It’s utterly ridiculous.
The housing outlook is very bleak, economists like to sound certain and reassuring, but who knows what storms may, or may not, errupt in the coming months.
Having recently managed to buy a house, I am not disappointed by this. We bought a home to live in, not as an investment, I don’t want to profit from an aspect of stability being dragged further out of reach from everyone else!
Isn’t that a 20% drop in real terms (after adjusting for inflation)?
Joke’s on them, my wages have dropped more than 10% (by whatever inflation is).
Thank me later lads, I bought my house last year. And as with anything, the minute I get involved, the arse drops out of it.
I invested in tech, then we had the “Everyones not watching telly anymore because the pubs are open now” sell off as well.
I keep seeing different drops by different people who I suspect want to buy houses…. Prices will dip then rise, there is no alternative, so stop whining people
No they won’t, there is still a massive housing shortage. They might not go up as much but they won’t drop by 10%, let alone the 30% one of these people is claiming.
Even in 2008 the drop was only soo ridiculously short term that it’s of virtually no significance and prices shot up straight after (to the ridiculous levels we see now)
28 comments
Still wouldn’t be able to afford a mortgage though.
Good, they need a long, slow drop to get to an actual natural level not inflated by government schemes.
To think back in the 90’s -2003 you could buy a house for 45-70k in Birmingham UK.
Now the same place it’s 135k if your lucky and the house will probably need work doing to it..
Most have been priced out the market decades ago and government schemes have just made ppl take on huge mortgages which will now hurt more
10% of £200,000 is 20,000… Show me a renter able to drop a lump sum of 180,000. This just means more businesses will buy houses to rent out.
A 10% drop sounds terrible for those on a mortgage (shadows of negative equity) but I’d you are buying a *home* and plan to stay there a number of years, a short term dip shouldn’t be of too much concern.
Any loss also needs to be chalked up against any extra costs one would have had from renting (which could include having had to move).
Our place has gone up by ~40% in barely 4 years. That is simply madness. Utterly batshit insane. So a 10% drop would mean it has *only* increases in value by 25%. Still mad if you ask me.
Of course, I am viewing this through the lens of it being a home to live in and not a rental to profit from, or an investment to hoard.
This honestly doesn’t sound like a good thing. In the short term, sure, but in the long run, it just seems like we’re heading into a massive recession.
I mean, we are anyway, but house prices collapsing never bodes well for future prospects. Just look at 2008.
Many are still priced out of buying a house regardless. Build more houses, heavily tax second/holiday home ownership and limit the amount of BTL properties an individual/company can own.
A third of all of our nation’s wealth can be seen in the growth in house prices over the last 20 years. That is absolutely absurd. Deliberate government policy has been to push as much wealth into house prices as possible; other countries mock us for basing our economy on it.
We need change. First Time Buyers are finding it increasingly impossible to get on the ladder, renters are getting put in even worse positions with rent spiralling upwards, and the interest rates are likely to stay high. But any significant drop in house prices means negative equity and recent FTBs losing their homes.
A sensible, thoughtful government would use all of the tools at its fingertips to attempt to keep house prices approximately flat for 5 years. This would see them get more affordable relative to wages but not push anyone into negative equity, and allow the wealth being unreasonably slammed into housing be spread around the economy.
Some things that the government can do:
Stamp duty
Build more homes (subsidising schemes or doing it themselves)
Reducing restrictions on building on brown / greenbelt
Raise taxes significantly on second & empty homes
Make primary home sales eligible for CGT if the difference between purchase and sale price exceeds the CGT threshold of £85k
Manage interest rates
The government won’t do this though, because the Conservative party’s voters are almost exclusively 50+ homeowners.
Base on roughly real experience for my younger brother.
The average house price today at my parents city is currently 320K.
10% drop would still leave it at 288K average.
5 years ago, the average was 220K average.
Still a 30-31% increase over 5 years.
Not counting compounded interest, he tried to save for a 10% deposit on a 220K at time 0 meant…
Within year 0-1, you’ll need 22.0K (*1800/month*)
Year 1-2, you’ll now need 23.3K (*970/month*)
Year 2-3, you’ll now need 24.6K (*680/month*)
Year 3-4, you’ll now need 26.0K (*540/month*)
Year 4-5, you’ll now need 27.3K (*450/month*)
Year 5…, you’ll now need 28.8K
Forever chasing that deposit for the same house, and that wasn’t including him renting/house share, and the other associated cost for buying (surveyors and lawyers etc).
This is how fucked up the growth has been.
Edit: The ( *amount* ) is what he needed to save monthly since year 0 onwards…
Edit 2: The amount of people who don’t understand Averages and its increase. It’s an example of available data for visualisation of the chase. One can obviously buy a cheaper property, but the increase in % is the same. (Not many FTB can save 1800 monthly, or even 450 monthly in 5 year hind sight, now try all that number at 50% cheaper price point, same issue)
over inflated house prices.
With inflation and interest rates, buy to let landlords are going to be totally screwed😂
I don’t see this now, the market in our area stumbled in Nov/Dec, but again is still climbing, shit houses are being priced as high as they were and the few nice ones are inflating further because of demand.
Supply has dropped very low and demand has not.
They can predict all they like. Increased burrowing costs materials and labour added to price drop will soon stop builders building,
Indeed the stories the other day said building firms are going bust at record rates.
Demand will still out weight supply. Might dip for a few years then it’s back up and running
“declines of 30% aren’t out of the question. Halifax sees an 8% drop. Others are more cautious, seeing smaller declines. Beacon Economic Consulting anticipates a 0.3% drop next year”
So 30% or next to nothing
For anyone who thinks this is a good thing, such a fall only takes things back to price it was in 2020, and it’s entirely because people’s ability to afford a purchase is falling. This is the situation getting worse, not better.
Just in time for all the rich people to buy them up rent them out at extortionate prices to add to their assets, they must be Cumming in their pants at thought of people defaulting on their mortgages so they can add even more to their wealth.
Why does everyone think a pricing crash will solve ftbs problems. Unless they have the cash to capitalise when it does crash it won’t help. The only ones with that cash will likely have bought anyway.
The banks will pull the high ltv products and if you can get a mortgage the interest will be higher so you glut not be able to afford the loan anyway.
As much as houses need to become more affordable it’d be so much better for everyone if this happened through inflation of everything else including wages while houses didn’t move and mortgage interest rates got massively regulated. There’s no way that’s going to happen but it’s the one way I think this could be done that doesn’t destroy the finance sector and/or leave tons of innocent people in negative equity.
Instead what will happen is the government and finance will fight tooth and nail for every penny and everyone will suffer for it.
Holy shit! Let’s cut even more public services so that we can cut interest rates to avoid this catastrophe!!
FTB on here celebrated interest rates rising and the supposed collapse of the housing market.
All that happened was families tightened their belts to pay their mortgages and stopped moving house reducing supply. Mortgages became more unaffordable making the FTB even further away from buying a decent house. And forced landlords to increase their rents which they are now complaining about.
Property prices haven’t went down for desirable houses. There is a lack of them but they still sell very quickly.
The houses that are left on the market are the crackden doerupers. Last summer yes they would still quickly sell. But not anymore. No one wants the mortgage and to have to do relocations. People want a property they can just move straight into now.
Right I’ve not a clue about buying housing. I’m saving for a deposit but we’re talking a good few years yet. Can anyone explain why negative equity is a bad thing ? Surly you just hold the asset until it gets to a price you want to sell it at or you just stay put ?
Like I said I don’t much about buying housing.
That’s still way higher than prices used to be ten years ago.
Recent FTB. Time will tell whether I was lucky or utterly screwed myself. Feel so bad for colleagues of mine on same pay priced out (or dodged bullets?) on same range as me after mere months due to interest rates going through the roof.
It’s utterly ridiculous.
The housing outlook is very bleak, economists like to sound certain and reassuring, but who knows what storms may, or may not, errupt in the coming months.
Having recently managed to buy a house, I am not disappointed by this. We bought a home to live in, not as an investment, I don’t want to profit from an aspect of stability being dragged further out of reach from everyone else!
Isn’t that a 20% drop in real terms (after adjusting for inflation)?
Joke’s on them, my wages have dropped more than 10% (by whatever inflation is).
Thank me later lads, I bought my house last year. And as with anything, the minute I get involved, the arse drops out of it.
I invested in tech, then we had the “Everyones not watching telly anymore because the pubs are open now” sell off as well.
I keep seeing different drops by different people who I suspect want to buy houses…. Prices will dip then rise, there is no alternative, so stop whining people
No they won’t, there is still a massive housing shortage. They might not go up as much but they won’t drop by 10%, let alone the 30% one of these people is claiming.
Even in 2008 the drop was only soo ridiculously short term that it’s of virtually no significance and prices shot up straight after (to the ridiculous levels we see now)
https://michaeljones.co.uk/news/overview-of-the-uk-property-market-over-the-last-30-years/
The housing market is a LOT more cramped now and until a lot more houses are built this simply won’t change.